Interim Report Released.

An interim report has been released by the U.S.-Canada Power System Outage Task Force entitled Causes of the August 14th Blackout in the United States and Canada. We believe that this report is well worth reading for those in the power business, not only in the US, but wherever independent and private power developers are involved. The report, in addition to looking at the situation in an highly professional manner, also provides a great deal of useful background information on grid operations and safety. Given the speculative nature of some of the earlier accusations and claims that circulated, we believe that this report is a welcome contribution.

We offer a direct link to this report as a service to our clients and friends. Please note that the report is a large file (4.3 MB) and is in Adobe Reader format.

Pan EurAsian Comments on the Report:

Most of the news summaries have cited the overgrowth of trees in the rights of way as the cause of the blackout and have tended to blame First Energy for not maintaining those rights of way to avoid contact with trees. To a limited degree we agree, but we get the impression from this report of a deeper cause. None of the tree contacts were unmanageable, according to the report, had the First Energy operators been aware of the problems.

More important, in our view, is the sense of over-reliance on computerized data collection, analysis and presentation. The First Energy alarm system failed, and the operators were evidently unaware of its failure. Thus, they were unaware of the developing cascade of line failures and not taking sufficient actions to correct or cope with the problems. The sequence of IT failures is worth examination, in our view, and would probably have been classified as "nearly impossible" in any scenario formulation exercise before the blackout. The report hints that analog data were available, could have been useful, but were not being observed at the time.

In our view, further examination of the degree of automation, leading to over-reliance on machines that can fail, is indicated by this report. There are lessons to be learned, and this is where we sense they are. Right of way maintenance is important, and should not be ignored. But, it is not the main lesson to be learned from this blackout.

The interim report is not the work product of Pan EurAsian: it is a public document prepared and published by the U.S. and Canadian governments. The link is posted here only to facilitate dissemination of this important and useful report.

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Pan EurAsian Enterprises is a consulting and financial advisory firm that specializes in energy and power generation projects including structuring and financing projects. We are focused on North America and Central and Eastern Europe. We would welcome your comments on the views expressed above, or your inquiries about our services. Please contact us by email. We look forward to hearing from you.

November 23, 2003